Basket Orders

What is a basket order?

A basket order is an order that contains multiple futures and/ or options contracts with the same underlying. These are often used in trading strategies that involve multiple positions. For example, a trader might use a basket order to simultaneously open or close several options contracts that are defined on the same underlying asset. By executing the trades as a single transaction, the trader can manage the risk of the overall position more effectively.

How to place basket orders?

On Delta Exchange web platform

1. Select Basket Order and choose the underlying you want to trade (BTC or ETH)

2. Choose the contracts by clicking on the Buy/Sell button adjacent to the strike price

3. Specify the order type and quantity for each contract (e.g., market order or limit order) and any other relevant parameters and place the oder.

On Delta Exchange app

1. Go to Trade and in the next screen click on Basket Order

2. The user has the option to create the basket for the selected underlying. They can also select a different underlying.

3. Now choose the strike price on the call or put side and enter the number of contracts that you want to trade. Click on Buy/Sell button to add the contract in the basket.

4. Specify the order type and quantity for each contract (e.g., market order or limit order) and any other relevant parameters and place the order

Benefits of using basket orders

1. Efficiency: Executing multiple trades as a single transaction can save time and reduce the risk of errors while placing an order.

2. Flexibility: Traders can use basket orders to manage complex trading strategies that involve multiple contracts.

3. Margin benefit: In the case of portfolio margin, the margin requirement for a basket order is computed by treating the entire group of orders as a single entity. Due to this, a basket containing a set of offsetting orders may require lower margin than placing the same orders individually. Please note that to this margin benefit is available only for market orders.

4. Risk management: Basket orders can be used to manage the risk of a portfolio more effectively by executing trades simultaneously.

Margin requirement in basket orders

• Isolated Margin: Each position is completely independent and the total margin required will be equal to the sum of the margin for each position.

• Cross Margin: The initial margin will be either same or lower than the margin required for Isolated Margin. In the case of Cross Margin, the value of long options is available to be used as margin. This reduces margin requirement relative to Isolated Margin. To take benefit of this, you should keep your buy options orders above the sell options orders in a basket. Additionally, you will get the benefit of PnL offsetting once positions are acquired.

• Portfolio Margin: The risk of the whole basket is analysed together to compute the combined margin requirement for the entire group which provides the benefit of PnL and risk offsetting. Please note that this benefit is available only for market orders.

Key points to note about basket orders

• A basket can consist of only futures and options of the same underlying. It is not possible to create a basket which has contracts with different underlying.

• Basket order is available on all devices.